- Varchasvi Gagal, the young CEO and MD of Datta Infra, has chosen to tackle and deliver solutions in one of the most difficult aspects of doing business in India. Land acquisition.
- The issue is as complex as it seems, as he explains in this discussion.
When it comes to sustainable projects in India, one of the most critical yet underestimated aspects remains land reclamation. Always a sensitive issue in the country, land reclamation for sustainable projects can be a really difficult problem for many developers, leading to long and expensive project delays. While local land aggregation companies and individuals have always operated, Datta Infra is one of the first attempts to bring it all under a professional, organized front.
Varchasvi Gagal is the Chief Executive Officer & Managing Director of Datta Infra, a unit of Datta Business Consultants Pvt. Ltd., one of the leading players for land aggregator and land development in India. A law graduate of OP Jindal Global University in 2016, Gagal, before taking over the reins of Datta Infra, also founded India’s first do-it-yourself document formatting platform, Legal Spell with a vision to revolutionize the way drafting documents in India. Dutta Infra currently counts Tata Power, SunSource Energy, Mount Litera Sea School, and indirectly, major Government PSUs including Kerala State Electricity Board, and NTPC among its clients. We talk to him to understand more about this crucial aspect of the sustainable energy business.
Q. Rules and policies with respect to land acquisition and aggregation have changed frequently. Is that an important reason why you chose to get into the business?
Varchasvi Gagal: Coming from a legal background, I was aware of the risks associated with land and how each industry is having difficulty establishing the foundations of major projects. It all starts with the land, and there is a significant variation in land laws across states, which requires a smooth machine to help these large houses. We have seen challenges such as SC laws on land transfer for solar projects, ceiling limits, environmental permits, GIB issues, and challenges to ownership and sale in government permits. We want to reward investment companies for their faith in the Indian economy by providing a safe haven for the development of these assets.
Q. Who are the other key players you compete with? How much of the market is with organized players like Datta Infra?
Varchasvi Gagal: Datta Infra currently has no direct competitor in the market. We are a one-of-a-kind company that provides an organized and sustainable solution for land consolidation to the players of sustainable energy in the market.
Q. Considering that sustainable projects are exempt from environmental and pollution clearance, what services do you provide there?
Varchasvi Gagal: Datta Infra aims to provide policies as well as the necessary permissions in accordance with local laws affecting the site. For all our clients, we also get land records dating back to thirty years, as well as agriculture, income, and title searches for land for sale. We are well versed in the laws of land division of various states. We are a one-stop solution in India for land infrastructure development, transmission connection solutions, land aggregation and solar energy, in addition to land aggregation and development.
Q. When it comes to land, what are the pitfalls developers underestimate? We have regularly seen asset-linked issues as the main reasons for project delays, for example?
Varchasvi Gagal: Land is governed not only by ownership but also by the nature of ownership on record and on the land. There are cases of Gloft Khatedari en khatedari rights prevalent throughout the state of Rajasthan, which means that in case of gair khatedariland is allocated but the rights regarding khatedari (use) of the land are not with the owner. Therefore, in such cases the sales / lease deeds may not be recorded for such countries until or unless you apply to the relevant government department and receive khatedari orders for the same. Issues of encroachment and overlapping villages, as well as effective land division for land ownership, remain difficult field battles for developers. Local political rivalries and the involvement of such groups impose significant costs on developers.
Getting the right of way (ROW) for the transmission line is one of the biggest challenges for any developer. A 20-kilometer power line of 440 kva requires at least 67-70 towers, which, combined with the required approval of various government and related agencies, as well as local body authorities, creates an even greater challenge. Another important problem that arises in land acquisition is determining the nature of land ownership and income laws that govern the ownership of such land, for example a village is generally considered to be under income if the records are governed by regular jamabandis posted on the Land Revenue website, while there are other villages that are under colonization and record is only maintained by colonization department which does not currently have an online presence. The Colonization Department has its own set of permits and regulations that require advanced reports for searching for legal titles and licensing requirements.
If a site is shared by multiple villages, then land ownership is also regulated by different local patwari and overlap of land can become a serious issue to deal with in such cases. The overlap is caused by the repeated drawing of village boundaries in combination with non-digitized property papers. In order to reach a friendly settlement between villages, a team of all patwaris assembled under the command of the district collector is required to ensure that the land quantity registered is correct and easily accessible. There are many layers involved, including dealing with the local tehsildar, sub-divisional magistrate, and local patwari, all of which need to be involved in order to complete the land division process effectively.
Q. In your opinion, how could the process of land reclamation be made simpler and faster?
Varchasvi Gagal: Accelerating the digitization of land records can simplify and accelerate the process of land acquisition. Land reclamation for solar projects would be more convenient if we had a good identification of suitable project sites based on their land type, use, resource potential, latitude and availability of transmission infrastructure. Consolidation of land records from the last 30 years can also help to streamline and improve the process of land reclamation.
Land registration has changed between multiple tehsils in the last sixty years attracting many conflicts between past sales deed and title clearance. A unique software with an interactive AI can enable substation support in eliminating such issues. Issues such as GIB, Colonization, IGNP, Forest, Environment, PACL and others need to be effectively clubbed into such software for transparency and investor confidence. We are currently working on a similar software and also plan to land banks in India by reducing complications for buying assets.
Q. In the experience of Datta Infra, how do you rate states for difficulty levels when it comes to land aggregation and acquisition?
Multiple owners and small property transactions are common in states with lower limits for land ownership ceiling, making the acquisition process more complex. The highest levels of radiation are found in Rajasthan and Gujarat, followed by Madhya Pradesh, Karnataka, eastern Ladakh, and Maharashtra. With large areas of barren land in Gujarat, Andhra Pradesh and Rajasthan, land reclamation is becoming more efficient in these areas.
Q. How do land purchase costs vary across states? Are there any benchmark costs per acre that large developers see when making bids? How do you see this market and prices evolving as India seeks a much higher solar target in 2020?
The cost of land varies by square foot and is largely determined by its connection, neighborhood, source, density, environment, amenities, and natural features. There is no fixed price for land across states, but energy generation is important for developers because it helps them generate revenue. The sooner you secure your country and submit your project, the sooner you can start billing your DISCOMS. The cost of land, which accounts for 5-7 percent of the total project cost, is directly related to transmission line distance, unit loss, and soil quality that sets the threshold for the total cost of the project. The cost of PV modules and structures are the only price variables that are not affected by country. However, loss of transmission line, cost per tower, total perimeter, depth per pile, vacation costs, availability of water resources, and accessibility to the land are just a few of the factors that play a role in determining the cost of land. against project costs.
Q. With a 300 GW target just for solar by 2030, India will need almost 1.5 million acres just for solar projects by 2030. Do you think the land for these projects is available at competitive rates?
Varchasvi Gagal: Land prices in Rajasthan and Andhra Pradesh have skyrocketed over the last two years, as has the leasing market. Land is available in states like Tamil Nadu, Andhra Pradesh, Madhya Pradesh, Rajasthan and Gujarat, but there is still a huge gap between the cost of land and the cost of the project. The cost of land is less than 6% of the total project cost. A land with good soil conditions can save developers cost per pile. A country with a perfect shape and less access roads can have a significant impact on the cost of fencing, PV installation and cabling. Finally, a country that is closer to an evacuating STU / CTU will greatly increase the cost of transmission lines and losses per unit.
The cost of land is not a problem, but a well-established site with in-depth legal controls will always help reduce project costs.
Q. Any other insights you want to share about the company in India.
Varchasvi Gagal: India has become a market leader in the solar market, and our venerable Prime Minister is the face of this transformation. With giant companies like Blackstone, NTPC, SJVN, SB Energy, Adani, Reliance, Tata Power, L&T, Sterling and Wilson, Sembcorp, Greenko, Azure, Avaada, and many more emerging aggressively as solar developers, module manufacturers, and EPC players. This is a direct implication of our government’s push through various PLI schemes, implications for custom duties, and electric cars and a strong thought process for replacing thermal energy with renewable energy.
To ensure that such investments are made honestly, we need efficient engineering to plan them out. As consultants, we want to provide legal, technical and connectivity licenses that will not only help deliver a good asset in your business, but also build it at the lowest possible cost. Our goal is to make it easier to finalize land for private ownership or lease, to facilitate government-private land permits, and to help obtain connection approvals. We want to play an important role in serving as a derisking catalyst for all types of investors in sustainable energy.
Q. Any state wise data on land lease rates?
Varchasvi Gagal: Western Rajasthan, especially Jaisalmer, is a large GIB habitat, but investors have been reluctant to invest there. Investors are currently looking for areas outside GIB with higher radiation levels. While Bikaner is one of the primary options, and there are more than 10 GW of solar projects in the works. Lease rent for infertile land has been increased from INR 16,000 per acre per year to INR 25,000 per acre per year, with an escalation of 5% every two years. Punjab has no longer closed solar parks, but our survey found rentals ranging from INR 50,000 per acre per year to INR 75,000 per acre per year.